Archive: May 24, 2017

In the United States, there are over 3,000 newspapers of which over 1,000 are daily and over 7,000 consumer magazines. The number of U.S. business magazines is also in the thousands. Supporting these publishers there are 4 major trade associations in the U.S. for the news media industry. There are 2 trade associations in the U.S. for the magazine media industry. There is a U.S. trade association for BtoB publishers and one for specialty information publishers.

Every one of the eight publishing trade associations has an ongoing initiative to deal with government policy ranging from postal rates to copyright regulation. Only one of the eight publisher trade associations in the U.S. has any initiative focused on the actual copyright compliant use of members content in the marketplace. That initiative, on the part of the News Media Alliance, is only 8 months old.

Except for a few, a very few publishers, the focus of copyright is on the creation of policy and regulation not the actual application or enforcement. Given the revenue implication demonstrated by those publishers that have pursued infringing behavior, the lack of sustained interest is befuddling. One observation is that the arena is overseen by the legal department instead of the business side.
Copyright regulation in the U.S. as it is with other countries is about preserving the right of ownership to intellectual property for a period of time. The purpose of which, as stated in the U.S. constitution is “to promote the Progress of Science and useful Arts”. Section 106 of title 17 of the U.S. code is where the rights are laid out which guarantee a rightsholder the right to monetize their property. Then section 107 counters that with the exceptions.

U.S. Fair Use has gotten a lot of bad press and a few bad judgements. I am biased in favor of supporting journalism, which as Craig Newmark stated, is the immune system of democracy. With that little moment of transparency out of the way. I will point out that Fair Use is an outgrowth of the international concept of Fair Dealing. Its purpose is not to provide a way to take commercial advantage of intellectual property without paying royalty. Its purpose is to provide legitimate exceptions for scholarly and creative uses of intellectual property. As such, it is applicable only as a defense after an infringement challenge has been presented. Thus, the use of content by any commercial enterprise without paying royalties in some form is at risk.

Presently the risk of being sued for infringement by a U.S. publisher is extremely low. That is changing. The efforts of the NMA in the marketplace are providing publishers with the potential that lies in collective action to enforce their intellectual property rights in the marketplace. So the risk may be low at present but the message is clear that it would be a good time to put a plan in place to mitigate the growing risk of being sued for infringement carrying fines in the neighborhood of $100k per article.

The purpose of License League is to offer a solution to mitigate the high cost of an infringement action. License League is the only content licensing entity to have available the requisite redistribution licensing required for the compliant use of content by the MME community. 94 publishers with over 2400 titles currently participate in the License League MME program.

There are 4 parts to the U.S. Fair Use Exception to copyright. All must be weighed in any litigation to determine infringement. Succinctly put, the use is weighed based on (1) whether it is used in a different way than the original, (2) how unique or creative is the original, (3) the impact of the portion copied, and (4) the financial effect on the rightsholders market. The first and the last are the telling points most applicable to the commercial use of content. The first usually centering around the question as to whether the use is “transformative”. This is whether it is being used in a significantly different manner or purpose than possibly contemplated by the rightsholder. The last consideration is whether the use is denying the rightsholder just compensation.

Here are some facts about the Media Monitoring and Evaluation (MME) marketplace: All MME companies are currently accessing your content. These companies cannot stay in business without your content. The majority of the more than 300 MMEs worldwide do not support U.S. copyright. They pay no royalties to U.S. publishers.

Given that such is the case, you will want to license your content through reputable MMEs or aggregators that will work to convert the market. And you will want to receive maximum compensation in the form of royalties.

Now, there are currently certain MMEs and aggregators seeking exclusive rights to your content. Their purpose is to gain market advantage, not to maximize your royalty revenue. There are four basic reasons this is bad for your business:

Number 1: Limiting the licensing of your content will limit usage and resultant revenue from the market. It would be nearly impossible for any licensee to warrant enough revenue for an exclusive to reflect the full potential of your content in the market.

Number 2: One grantee would not have the resources and market expertise to be able to uncover unlicensed use. Even if such was discovered, the grantee would not have legal standing and thus you would have to commit resources to police the unauthorized use. From experience, I can tell you the reality is quite different from the sales pitch. I have seen and reported to you over the past seven years many, many incidences of infringing activity and there has been little or no sustained resource allocation to address it.

Number 3: By signing an exclusive agreement, you would be penalizing compliant MMEs, which are in the vast minority and instead deserve your support. The majority of MMEs are currently avoiding the cost of compliance and will continue to do so. They will continue to find workarounds to access your content without you even being aware of their actions.

Number 4: This relates to potential liability stemming from the Sherman Act, Part 2. Simply put, if by granting an exclusive to an MME or aggregator you deny access to your content by a competitor of the grantee, you are exerting market force or enabling it if the MME or aggregator creates unreasonable barriers for its competitors to access the content.

In short: Giving any MME or aggregator an exclusive sharply reduces your revenue potential (although it may seem like a good deal at the outset), dramatically subverts enforcement of copyright compliance in the marketplace and opens you up to antitrust liability.